Similar Stages of Firm Life Cycle

Abstract

This paper is intended to offer an analysis of the stages of firm life cycle in companies at the same sector. This analysis reviews a theory stated that there are different phases firms will follow, which can not be easily reversed. This study proposes the concept of firm life cycle stages that being developed into five stages, namely birth, growth, maturity, maturity revival, and maturity survival phases. The last three stages are interchangeable and repeatedly. Using sales as a proxy, the concept of firm life cycle is applied to companies in the sectors of stone, clay, glass, and concrete products. For companies with sales growth that have already been in stability condition - in maturity phase, their sales growth can change into fluctuating again before coming back into stability. But, it does not mean that their phase step back into growth. This condition happened repeatedly causing companies experiencing similar phases. This concept shows that company will always has three basic phases. But changing phases will happen continously as long as the company still survive. With repetitive changes in the phase that experienced by the companies, then it can be seen that maturity revival phase is the dominant phase among others. Throughout the life of all companies, maturity revival phase took places in more than 50%. The longer the life of the company, the longer the existence of maturity revival phase. This leads to the conclusion that sales growth often fluctuates. Furthermore, for certain period of time most companies in sector stone, clay, glass, and concrete products can be in similar stages although they have different IPO date. For example, from 2002 to 2003 two companies were in low level sales growth. During 2004-2011, most companies in sector stone, clay, glass, and concrete products were in maturity revival stage. Started from 2011 until 2012, two companies succeed to make sales in maturity phase again. During 2013-2014 sales data of two companies were fluctuated at high level but two others were unstable at low level. In addition, referring to last years sales data all companies were in low level although two companies among them were more stable, so they were in maturity survival phase. Similarity that happened exclusively, as showed in our research, demonstrates a contradiction with the proposition saying that firm life cycle stage is purely based on firm itself therefore there is no relation between companies’ firm life cycle.